Pre-open eMini SP 500 Morning Report 5.6.10

This is a guest post from Precision Capital Management

The Precise Take – Volatility increases on escalating Eurozone crisis

Leaders Analysis:  The US Dollar Index continued its surge overnight, with next resistance far away at 85.61.  Conversely, the Euro is down with next support at 1.2628 (minor), then 1.2439 (major).  The EuroYen entered territory not seen since February 2009, which was approached from the downside first in October 2008.  While it has bounced off pivot support, there should be more downside over the next week or two.  Long term Treasury yields, however, have put in a bottoming pattern on the daily.  For today, then, the leaders are slightly equities bearish.

Medium Term Analysis:  While the ES is oversold in the short term and it would be tempting to expect a rebound, the Eurozone crisis continues to intensify with the solvency of France, Germany and the UK being attacked in the CDS markets.  In short…

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